If two shares are perfectly negatively correlated, a portfolio with equal weighting in each share will always have a volatility (standard deviation)of 0.

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Quizplus · Accepted Answer

Perfectly negatively correlated shares mean that when one share's price goes up, the other's goes down in a perfectly inverse manner. However, the volatility of the portfolio depends on the individual volatilities of the shares. If the shares have different volatilities, the portfolio's volatility won't be zero, even though the correlation is -1.

If Two Shares Are Perfectly Negatively Correlated, a Portfolio with Equal